M/S. VASUDEO AHUJA, Khandwa V. THE ITO, Khandwa

ITA 201/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6066 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S N AGRAWAL
• Section: 40A(3); 68

Judgement Text

VASUDEO AHUJA SMC ITA 201 OF 2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO. 201/IND/2016 A.Y. 2010-11 VASUDEO AHUJA, KHANDWA PAN AAAFV 8639 A :: APPELLANT VS ITO-KHANDWA :: RESPONDENT ASSESSEE BY SHRI S.N. AGRAWAL RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 24.5.2016 DATE OF PRONOUNCEMENT 24.5.2016 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E ORDER OF LD. CIT(A)-II, INDORE, DATED 30.11.2015. 2. FIRST GROUND IS WITH REGARD TO CONFIRMATION OF D ISALLOWANCE AT RS.1,94,048/- MADE BY THE ASSESSING OFFICER INVOKIN G THE PROVISIONS OF SECTION 40A(3). SHORT FACTS OF THE CASE ARE THAT TH E ASSESSING OFFICER OBSERVED THAT DURING THE YEAR UNDER APPEAL, THE ASS ESSEE HAD MADE PAYMENT IN EXCESS OF RS 20000/- IN RESPECT OF THE F OLLOWING BILLS:- VASUDEO AHUJA SMC ITA 201 OF 2016 2 S.NO BILL NO DATE AMOUNT [RS] 1 75 27-05-2009 32,344 2 86 18-08-2009 32,344 3 97 10-09-2009 22,641 4 116 09-10-2009 32,344 5 138 11-11-2009 22,641 6 165 12-12-2009 22,641 7 219 25-02-2010 29,093 1,94,048 ACCORDINGLY, THE AO MADE ADDITION OF RS.1,94,048/- U/S 40A(3) OF THE I.T. ACT. MATTER CARRIED TO LD. CIT(A), WHO CONFIRMED T HE ACTION OF THE ASSESSING OFFICER. BEING AGGRIEVED, THE ASSESSEE IS BEFORE THIS TRIBUNAL. 2.1 BEFORE ME, LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE PURCHASED ZARDA [TOBACCO] AND BIDI FROM M/ S PATEL & CO, KHANDWA. THAT BIDI WAS PURCHASED BY THE ASSESSEE FR OM M/S PATEL & CO THROUGH THE ACCOUNT PAYEE CHEQUES. HOWEVER, IN C ASE OF ZARDA [TOBACCO] BEING A RAW MATERIAL WHICH WAS PURCHASED BY THE ASSESSEE MOST OF THE TIME AFTER THE BANKING HOURS AND THE SU PPLIER ALSO INSISTED FOR MAKING PAYMENT IN CASH. SINCE, THE ZARDA WAS IN HIGH DEMAND AND PRICE OF THE ZARDA WAS ALSO FLUCTUATING FREQUENTLY. HENCE, IN RESPECT OF ZARDA, THE ASSESSEE HAD PAID AMOUNT IN CASH ONLY. T HE ASSESSEE HAD PAID VAT TAX IN EACH BILL. HENCE, INTENTION OF THE ASSESSEE WAS ALSO GENUINE. THE ASSESSEE HAD PURCHASE BIDI TO THE TUNE OF RS 8.47 CRORES VASUDEO AHUJA SMC ITA 201 OF 2016 3 AND RS 8.46 CRORES WERE PAID THROUGH AN ACCOUNT PAY EE CHEQUES AND RS 1,15,000/- ONLY IN CASH IN DIFFERENT DATES BELOW RS 20000/-. HENCE, THE ASSESSEE HAS PAID AMOUNT THROUGH CHEQUES ONLY. HOWEVER, ON ACCOUNT OF ZARDA PURCHASE, THE ASSESSEE MADE PAYMEN T IN CASH AS INSISTED BY THE SUPPLIERS BUT THE GENUINENESS OF TH E PURCHASES WAS BEYOND DOUBT. THE ASSESSEE HAS ALREADY SHOWN INCOME BY CREDITING THE SAID AMOUNT IN ITS PROFIT & LOSS ACCOUNT IN FORM OF SALES. HENCE, THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISION OF SECTION 40A[3] OF THE INCOME TAX ACT. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 2.2 I HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ASSES SING OFFICER HAS OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE ANY EV IDENCE IN SUPPORT OF THE EXPLANATION THAT THE CONCERNED COMPANY PRODU CES A DEFINITE QUANTITY OF ZARDA IN EVERY MONTH. ALSO, NO EVIDENCE IN RESPECT OF CONDITION OF CASH PAYMENT BY THE CONCERNED WAS PROD UCED BEFORE THE ASSESSING OFFICER. LD. CIT(A) ALSO HELD THAT THE AS SESSEE COULD NOT CONTROVERT THE FINDING OF THE ASSESSING OFFICER. EV EN BEFORE ME, THE ASSESSEE MADE THE SUBMISSION BUT COULD NOT PRODUCE THE RELEVANT POSITIVE EVIDENCE, THEREFORE, THE FINDING RECORDED BY THE REVENUE VASUDEO AHUJA SMC ITA 201 OF 2016 4 AUTHORITIES COULD NOT BE CONTROVERTED. ACCORDINGLY, THIS GROUND OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 3. IN THE NEXT GROUND, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF DISALLOWANCE OF RS.30,000/- MADE OUT OF RENT PAI D. SHORT FACTS ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S NOT LET OUT ITS SHOP SITUATED AT BAJRANG CHOWK AND ON THE CONTRARY PAID RENT OF RS 80200/-. THE ASSESSING OFFICER HAS DISALLOWED THE A MOUNT OF RENT BY RS 50000/- AND RESTRICTED THE CLAIM OF RENT PAID TO RS 30200/-.THE LD. CIT(A) REDUCED THE AMOUNT OF DISALLOWANCE FROM RS 50,000/ - TO RS 30,000/-. STILL AGGRIEVED, THE ASSESSEE IS BEFORE THIS TRIBUN AL. 3.1 BEFORE ME, LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE HAD ACTUALLY PAID RENT OF RS 82,200/- FOR HIS BRANCH OFFICE. THE AMOUNT OF RENT PAID FOR THE PURPOSE OF BUSINESS WAS ALSO NOT IN DISPUTE. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF R EVENUE AUTHORITIES. 3.2 I HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT IN THE PR ESENT CASE THERE WAS NO DISPUTE ABOUT THE USE OF THE RENTED PREMISES FOR TH E PURPOSE OF BUSINESS. THE ASSESSING OFFICER HIMSELF WAS SATISFI ED WITH THE USE OF THAT PREMISES BUT DISALLOWANCE WAS MADE FOR THE REASON T HAT OTHER PREMISES OF THE ASSESSEE WAS NOT LET- OUT. HOWEVER, I FIND T HAT AS PER PROVISION OF SECTION 30 OF THE INCOME TAX ACT, DEDUCTION FOR REN T IS ALLOWABLE WHERE VASUDEO AHUJA SMC ITA 201 OF 2016 5 THE PREMISES ARE OCCUPIED BY THE ASSESSEE AS A TENA NT AND ALSO USED FOR THE PURPOSE OF BUSINESS. THEREFORE, I AM OF THE VIEW THAT ADDITION IS NOT JUSTIFIED. ACCORDINGLY, THIS GROUND OF THE APPE AL OF THE ASSESSEE IS ALLOWED. 4. IN THE NEXT GROUND, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS 1776/- MADE OUT OF INTEREST PAID. SHORT FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FI RM HAD PAID INTEREST TO SMT. HEENA AHUJA AT 12% AND AS PER HIS CALCULATI ON, THE AMOUNT OF INTEREST AS CALCULATED COMES TO RS 51670/- ONLY, WH EREAS THE ASSESSEE HAS PROVIDED THE AMOUNT OF INTEREST OF RS 53,446/-. THUS, DIFFERENCE OF RS 1776/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) MAINTAINED THE ADDITION AS MADE BY THE A SSESSING OFFICER. THUS, THE ASSESSEE IS BEFORE THIS TRIBUNAL. 4.2 BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER CALCULATED SIMPLE INTEREST AT 12% WHEREAS NOW-A- DAYS, BANK HAD ALSO CHARGED INTEREST ON MONTHLY CUM ULATIVE. IF 12% INTEREST IS TO BE CALCULATED AT MONTHLY CUMULATIVE FIGURE, THE SAME COMES TO MUCH HIGHER THAN WHAT WAS PAID BY THE ASSESSEE. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 4.3 I HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ASSES SING OFFICER HAS HIMSELF VASUDEO AHUJA SMC ITA 201 OF 2016 6 NOT DISPUTED THE UTILIZATION OF THE FUNDS FOR THE P URPOSE OF BUSINESS OF THE ASSESSEE. HENCE, MERELY ON THE BASIS OF CALCULATION AND THAT TOO, AT SIMPLE INTEREST, DISALLOWANCE OF RS 1776/- MADE OUT OF INTEREST PAID IS NOT JUSTIFIED. I, THEREFORE, DIRECT THE ASSESSING O FFICER TO DELETE THE SAME. ACCORDINGLY, THIS GROUND OF THE APPEAL OF THE ASSES SEE IS ALLOWED. 5. IN THE NEXT GROUND, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS 1,50,000/- MADE TO THE INCOME OF THE ASSESSEE U/S 6 8 OF THE I.T. ACT. SHORT FACTS OF THE CASE ARE THAT THE ASSESSING OFFI CER OBSERVED THAT PRIOR TO THE RECEIPT OF LOAN FROM SMT. HEENA AHUJA & SMT. NEELAM AHUJA, CASH WAS DEPOSITED BY THEM IN THEIR BANK ACCOUNT. T HE ASSESSING OFFICER DID NOT DISBELIEVE ENTIRE AMOUNT OF LOAN BU T THE CASH AS DEPOSITED PRIOR TO ISSUANCE OF THE CHEQUE WAS DISBE LIEVED. THUS, THE ASSESSING OFFICER ADDED AMOUNT OF RS 150000/- TO TH E INCOME OF THE ASSESSEE BY INVOKING THE PROVISION OF SECTION 68 OF THE ACT. LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. BEIN G AGGRIEVED, THE ASSESSEE IS BEFORE THIS TRIBUNAL. 5.1 BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPROACH OF THE ASSESSING OFFICER WAS NOT CORRE CT. SINCE, EITHER ENTIRE LOAN WAS GENUINE OR ENTIRE LOAN WAS NOT- GEN UINE. THE ASSESSING OFFICER CANNOT TREAT THAT PART OF THE LOAN AMOUNT W AS GENUINE AND PART OF THE LOAN AS GIVEN AFTER DEPOSITING CASH IN THE BANK ACCOUNT PRIOR TO THE VASUDEO AHUJA SMC ITA 201 OF 2016 7 ISSUANCE OF THE CHEQUES WAS NON- GENUINE. THE ASSES SEE HAD FILED COPY OF CONFIRMATION LETTER, COPY OF INCOME TAX RETURN A ND BANK ACCOUNT AND THEREFORE THE ASSESSEE HAS PROPERLY DISCHARGED PRIM ARY ONUS LYING ON IT. THE ASSESSING OFFICER FOR THE SIMPLE REASON THAT CA SH WAS DEPOSITED IN THE BANK ACCOUNT OF THE LOAN CREDITORS ADDED RS. 90 000/- AND RS.60000/- TO THE INCOME OF THE ASSESSEE, WHICH WAS NOT PROPER. WHEN THE ASSESSEE IS ABLE TO PROVE THE IDENTITY, CREDITW ORTHINESS AND GENUINENESS OF THE TRANSACTIONS THEN IT WAS NOT JUS TIFIED TO MAKE ADDITION IN RESPECT OF PART OF THE AMOUNT AS RECEIVED FROM T HE LOAN CREDITORS. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5.2 I HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ASSES SEE DURING THE COURSE OF ASSESSMENT PROCEEDING HAD FILED RELEVANT DOCUMEN TS SO AS TO JUSTIFY THE IDENTITY, GENUINENESS AND CAPACITY/ CREDITWORTH INESS OF THE LOAN CREDITORS. ENTIRE AMOUNT OF UNSECURED LOAN WAS RECE IVED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES. CONFIRMED C OPY OF ACCOUNT OF LOAN CREDITOR WAS ALSO FILED BY THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDING. COPY OF BANK ACCOUNT OF THE LOAN CREDITORS WAS ALSO FILED BY THE ASSESSEE WHEREIN THE AMOUNT AS AD VANCED BY THE LOAN CREDITORS WAS DULY REFLECTED. THUS, THERE WAS NO DI SPUTE ABOUT THE GENUINENESS OF THE LOAN CREDITORS. ACCORDINGLY, THE ASSESSEE HAS VASUDEO AHUJA SMC ITA 201 OF 2016 8 DISCHARGED ONUS LYING ON IT. KEEPING IN VIEW THE LA NGUAGE OF THE PROVISION OF SECTION 68 OF THE ACT, I FIND THAT THE ASSESSEE HAS OFFERED THE EXPLANATION ABOUT THE NATURE OF SUM OF RS 1,50, 000/- AS FOUND CREDITED IN HIS BOOK AS A LOAN TAKEN BY HIM AND THE SAME WAS ALSO CONFIRMED BY ALL THE LOAN CREDITORS. HENCE, NATURE OF TRANSACTION AS EXPLAINED BY THE ASSESSEE WAS CORRECT. FURTHER, THE ASSESSEE HAS ALSO OFFERED EXPLANATION ABOUT THE SOURCE OF AMOUNT AS F OUND CREDITED IN THE CASH BOOK IS ON ACCOUNT OF LOAN TAKEN FROM THESE LO AN CREDITORS AND ALL THE CREDITORS ALSO ACCEPTED ABOUT THE LOAN GIVEN BY THEM TO THE ASSESSEE IN THE CONFIRMATION LETTER. THE ASSESSING OFFICER DOUBTED ABOUT THE GENUINENESS AND CREDITWORTHINESS OF THE LOAN CR EDITORS WITHOUT ANY REASON AND IN CASE OF NON-ACCEPTANCE OF EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER SHOULD BRING CONTRARY MATERIA L ON RECORD TO SUPPORT HIS CASE. IN CASE OF ANY DOUBT ABOUT THE CREDITWORT HINESS OF THE LOAN CREDITOR, THE BEST RECOURSE AS AVAILABLE WITH THE A O IS TO REFER THE INFOMATION TO THE CONCERNED AO WHERE THESE LOAN CRE DITORS ARE REGULARLY ASSESSED TO TAX. THE RATIO LAID DOWN IN THE FOLLOWI NG CASES FURTHER SUPPORTS MY VIEW: CIT VS METACHEM INDUSTRIES REPORTED IN 245 ITR 160 (MP) ORBITAL COMMUNICATION (P) LTD 327 ITR 560(DELHI) DWARKADHISH INVESTMENT (P) LTD 330 ITR 298 ( DELHI) ASHOK PAL DAGA VS CIT REPORTED IN 220 ITR 452 (MP) CIT VS REAL TIME MARKETING (P) LTD., 306 ITR 35 (DE L) DCIT VS ROHINI BUILDERS, 256 ITR 360 (GUJ) VASUDEO AHUJA SMC ITA 201 OF 2016 9 CIT VS BARJATIYA CHILDREN TRUST, 225 ITR 640 (MP) CIT VS ORISSA CORPORATION (P) LTD, 159 ITR 78 (SC) CIT VS DWARKADHISH INVESTMENT (P) LTD, 330 ITR 298 (DEL) CIT VS RANCHHOD JIVABHAI NAKHAVA, 21 TAXMANN.COM 15 9 (GUJ) ON CONSIDERATION OF THE ABOVE FACTS/SUBMISSIONS IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS, I AM OF THE VIEW THAT IN T HE PRESENT CASE, ALL THE PARAMETERS OF THE PROVISION OF SECTION 68 OF TH E ACT HAVE BEEN MET OUT BY THE ASSESSEE, THEREFORE, THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN ADDING AN AMOUNT OF RS 150000/- TO THE INCOME OF TH E ASSESSEE. ACCORDINGLY, I DIRECT TO DELETE THE SAME. THUS, THI S GROUND OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE NEXT GROUND, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF INTEREST OF RS 4543/- MADE OUT OF TOTAL INTEREST PAID. SHORT FACTS ARE THAT THE ASSESSING OFFICER DISALLOWED RS 2242/- AND RS 2301/- ON ACCOUNT OF INTEREST PAID TO SMT. NEELAM AHUJA AND S MT. HEENA AHUJA, RESPECTIVELY, FOR THE REASON THAT LOANS TAKEN FROM THESE CREDITORS WERE NON- GENUINE. I FIND THAT THIS GROUND OF APPEAL IS CONSEQUENTIAL TO THE ADDITION ON ACCOUNT OF UNSECURED LOAN U/S 68 OF THE I.T. ACT. SINCE I HAVE ALLOWED THE GROUND IN RESPECT OF ADDITION U/S 68, T HE PRESENT GROUND IS ALSO ALLOWED BEING CONSEQUENTIAL. VASUDEO AHUJA SMC ITA 201 OF 2016 10 7. IN THE LAST GROUND, THE ASSESSEE HAS CHALLENGED THE CHARGING OF INTEREST. I FIND THAT THE ISSUE OF CHARGING OF INTE REST IS CONSEQUENTIAL IN NATURE, THEREFORE, SAME DOES NOT REQUIRE ANY SEPARA TE ADJUDICATION. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24.5.201 6. SD/- ( D.T. GARASIA) JUDICIAL MEMBER DATED : 24.5.2016 !VYS! COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR, INDORE